Biodiversity Credits - Reassuringly Expensive?

This eagerly awaited announcement obviously gives farmers and landowners a clear steer on what BNG units are worth on the open market.?

?It’s important to remember these are only indicative prices and that mandatory Credit prices will be released in November, but in the meantime these new figures will act as a good guide for landowners and developers considering selling units.?

?Many people are keen to take advantage of BNG-related opportunities, so this will be another piece in the jigsaw allowing them to successfully plan a project.

?BNG payments at these rates can represent far, far higher returns on a per hectare basis than BPS or Stewardship did, but projects are often very front-loaded in terms of costs, so you need to be mindful of cashflow considerations and you have to be prepared to commit to them for the long term. Dedicating your land as biodiversity gain land will also change its value.

?The newly released Credit prices are in lines with expectations, however the spatial multiplier (having to buy two Credits for every one needed) will make them unattractive for many developers. The pipeline of sites that Defra/Natural England have been working with to receive investment from statutory Credit revenue are likely to be disappointed with the news.??It seems unlikely that, at such a prohibitive price, Defra will collect much revenue from Credit sales to reinvest in strategic biodiversity gain. However, the price will certainly act as a stimulus for the local market.

?For farmers and landowners considering BNG, the first step to take is to do a baseline habitat survey.?This involves establishing the type of habitats currently on the ground and modelling those which you could enhance or create.

?Having credible, authoritative data will help you win the confidence of developers looking to do BNG deals, and it also means you won’t be reactive if an opportunity presents itself. Instead, you will have a proper thought-through plan for how you can deliver BNG and how that fits with the rest of the business.?

?What’s important with any BNG creation project is to have a vision that is realistic and achievable, taking into account the habitats you already have, your soil types, and your experience of this type of project. For most people, for example, the medium distinctiveness grassland (￡42,000 per Credit) would be eminently more achievable than the high distinctiveness grassland (￡48,000).

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5 factors to bear in mind if considering a BNG project…

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1?Think long-term

BNG is a long-term proposition (30 years or longer) so discuss plans with your likely successor(s). It could provide a guaranteed revenue for decades, but you need to be comfortable tying up ground long term, possibly in perpetuity. There also could be inheritance (and other tax) implications.?

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2?The fit with farming

It’s important a project dovetails well with your current and future farming enterprises. There are great synergies to be had – a biodiverse-rich environment could turn the key, for example, on recreation and tourism opportunities. But consider all the knock-on implications – what might farming fewer acres mean for your fixed costs, for instance, or might you need to introduce a livestock enterprise to graze a new meadow??

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3?Opportunity cost

Don’t just consider the returns BNG will bring – also calculate the income that alternatives could yield. The potential for other enterprises may be limited on some parcels of land, but elsewhere you may have multiple options. You also have to take into account any reduction in value of the land.?

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4?Is it really me?

Be honest with yourself about your track-record creating and maintaining habitats and biodiversity. If you have a proven pedigree and are genuinely enthusiastic about BNG, you are more likely to hit the ground running and make it work.?

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5 Start small

Remember you don’t have to put your whole farm into a project. You could start with just a field or even a portion of a field. So alongside producing food to feed a hungry world, you’re helping tackle some of the biggest challenges that society faces such as biodiversity declines and climate change.